Posts Tagged ‘RuggedCom’

Good news for shareholders of Toronto-based RuggedCom, one of the world’s leading makers of ruggedized networking gear for the smart grid. Facing a hostile takeover from St. Louis-based Belden Inc., RuggedCom has found a white knight in Siemens Canada Ltd., the Canadian subsidiary of German industrial giant Siemens AG.

Siemens has agreed to purchase RuggedCom for $382 million or $33 a share, compared to the $272.4 million or $22 a share offer from Beldon. It represents a 50% premium on a per-share basis and, quite frankly, Siemens is a better fit for RuggedCom and for keeping innovation in Ontario.

Siemens Canada, which is based in Burlington, Ont., has a strong and growing presence in Canada — about 4,400 employees and $3 billion in annual revenues. It is also pushing hard into the same smart grid space occupied by its main competitor, General Electric. Ontario is shaping up to become a hub of smart grid development in North America, so it makes sense for Siemens and Vaughan, Ont.-based RuggedCom to hook up.

I was the first journalist to write about RuggedCom with a story in the Toronto Starback in July 2006. Since then it has consistently grown revenues and profits, even during the downturn. “Either we’re going to get acquired by a strategic peer or reach a point where we’ve got … a good story to take it to an IPO,” company founder and CEO Marzio Pozzuoli confidently told me when we first spoke nearly six years ago. Pozzuoli, by the way, was a technology manager in GE’s power management operation before deciding to leave the company to found RuggedCom. Such a good move. The successful IPO part came true in 2007, and now the strategic acquisition part is coming true with the Siemens purchase. As Pozzuoli stated today, “We have great respect for Siemens and believe RuggedCom will be well positioned for continued growth and industry leadership under their ownership.”

Could RuggedCom have done it alone? Perhaps — but with the massive clout of Siemens behind it, it can do a heck of a lot better. That’s just how the cleantech space is expected to be over the coming years, as startups with great technology and proven leadership seek the resources and reach of established multinationals. An added benefit to this deal is that it seems to reinforce Siemens’ commitment to Ontario.

My Clean Break column from Friday revisits RuggedCom, the Woodbridge, Ontario-based maker of ruggedized communications equipment for the smart grid. The company celebrates its 10th anniversary this week, and is at the top of its game. Sales of routers and switches designed to operate in the harsh environment of the grid are climbing steadily, profits are also growing, and the company is on track to breaking $100 million a year in revenues, about two thirds of it coming from utility customers. In the market it plays in, the company has a commanding lead over big names such as Cisco and General Electric, and while it doesn’t get much attention from media south of the border, utility purchase managers know the company well. Investors are starting to catch on — in the past four months the company’s share price has shot up 70 per cent.

Ontario has done well with its deployment of smart meters, but it’s often forgotten that the smart grid is much more than that. Smart meters are on one edge of the grid — that is, attached to the customer, no different than a cable modem’s placement in the larger cable infrastructure. But the smart grid is about adding automation, communications and digital technologies throughout the entire grid, from generation to delivery to consumption, with the idea that the information collected and acted on can make the electricity system more efficient, adaptable, reliable and safer, while allowing for the introduction of new services and business models that ultimately benefit consumers.

RuggedCom supplies the core communications technology for transmission and distribution infrastructure. And it’s not alone in Ontario. General Electric decided back in the mid-1990s to consolidate its global operations around T&D equipment and today its facility in Markham is considered the company’s global smart grid headquarters with respect to core grid products. The equipment GE and RuggedCom are designing and manufacturing in Ontario, and exporting to countries such as China, may not be as interesting as smart meters, in-home displays, energy-management portals, or smart appliances, but they’re arguably more important to realizing the true potential of the smart grid.

And Ontario, it seems, is a hotspot for this kind of innovation. RuggedCom’s CEO, in fact, believes the company can grow to more than a billion dollars in revenues over its next 10 years. Canada’s next RIM? Wouldn’t be as as high profile, but certainly the potential for that kind of success is there.

Toronto-based RuggedCom continues to defy the economic downturn and prove the smart grid is the market to be in by posting a 52 per cent increase in fourth-quarter revenue and 49 per cent increase in same period profits. For the fiscal year, the company’s profit jumped 154 per cent. The company’s annual revenue now tops $60 million, 63 per cent of which is coming from the utility industry through sales of smart-grid networking gear. Find me another company that has seen its stock value jump 75 per cent higher than what it traded at just before the October 2008 market crash. RuggedCom is indeed a rare bird. It’s why I’m always amazed to see the U.S. media ignoring this story. There is so much attention to Cisco getting into the smart grid that nobody has noticed that little RuggedCom leads the market in the sale of networking equipment for the grid, or that RuggedCom plans to leverage that leadership position and expand its presence throughout other aspects of grid modernization. In fact, I wouldn’t be surprised if Cisco is doing its due diligence on RuggedCom as a possible acquisition. It fits the Cisco purchase profile, and compared to other smart-grid plays its P/E ratio isn’t that rich.

Another company that’s overlooked by U.S. media is Ottawa-based Cyrium Technologies, which just announced record performance from its commercially manufactured multi-junction solar cells, which are based on quantum dot technology. “Cyrium’s first generation solar cells offer efficiencies of 40 per cent or higher together with a nearly constant conversion efficiency for solar concentrations from 200 to greater than 1,000 suns,” the company said. This is a big deal, given that the other “records” touted to date, which range from 40.8 to 42.8 conversion efficiency (these claims are in dispute — see Wikipedia entry), have been limited to the lab. Cyrium, on the other hand, is actually manufacturing limited quantities of its cells for testing by potential customers. And the company isn’t resting on its laurels, either. “Cyrium anticipates its second generation product will reach 43 per cent efficiency within one year and third generation products are targeted to be at 45 per cent within two years,” the company said.

Meanwhile, Montreal-based Enerkem has been granted a permit to commence construction of what it’s calling the “world’s first commercial municipal waste-to-biofuels facility.” The $70 million facility, located in Edmonton, Alberta, will take municipal solid waste that’s left over after recycling and composting and will convert that waste into ethanol using Enerkem’s process. The project is a joint-venture between Enerkem (technology supplier) and Greenfield Ethanol (ethanol producer). “This unprecedented project is set to change the dynamics of the waste and fuel industries by making waste — that would otherwise be landfilled — a resource for transportation fuels,” said Enerkem CEO Vincent Chornet. I know I won’t be the only one following this project closely.

Finally, honorable mention goes to Toronto-based WhalePower, which has just made it as a finalist at the prestigious INDEX international design competition in Copehagen, Denmark. You may recall WhalePower’s new wind-turbine blade design, which is inspired by the humpback whale’s tubercle-line flipper. This bumpy leading edge gives the whale more agility in water. WhalePower has adapted the design to turbine blades, allowing for more efficient capture of wind energy and access to this energy at lower speeds. There are five categories in the Copenhagen competition, and the winner of each category gets 100,000 Euros. Winners will be selected in August and the winning designs will also become part of a touring show through Asia and Europe. WhalePower is competing in the “community” category against some tough competition, including Shai Agassi’s Better Place.

But enough with the bragging Canuck — let’s end on a more negative note. (more…)

I’m encouraged by many of the end-of-year stories coming out of the greentech community. Most of them argue that the “smart grid” will be a major story in 2009, and as my own year-end musings show I couldn’t agree more. In fact, my final story of the year is about the smart grid and its inevitable coming into being. Much of my story is through the seasoned eyes of Marzio Pozzuoli, founder and CEO of Woodbridge, Ontario-based RuggedCom Inc., the leading supplier of hardened communications gear to utilities around the world. In other words, RuggedCom sells routers, switches and wireless equipments for electrical substations. As more of this gear is installed we begin to see the grid as an extensive two-way communications network, able to collect and transmit information to where it’s needed. The next step? Creating the software and setting up the systems that can organize, analyze and ultimately act on the information collected in a way that improves the efficiency, reliability and self-healing capability of our electricity system and makes integration of renewables and distributed generation much easier. No wonder the likes of IBM, Hewlett-Packard, Cisco, Oracle, Microsoft, Google and other giants of the IT sector are beginning to take notice and position themselves in what promises to be a massive market.

UPDATE: Perhaps it’s just a coincidence that this happened with the publication of my smart grid story, but RuggedCom’s stock shot up 25 per cent today and hit a 52-week high. There are not many companies ending 2008 who can claim they’re trading at a 52-week high!